New business incubator promises to spin out 30 startups per year

Every week Techvibes republishes an article (or two) from Business in Vancouver. This article was originally published in issue #1072 – May 18 – 24, 2010.

A Silicon Valley-based technology incubator that has more than 300 tenants along the U.S. west coast has promised to set up shop in Vancouver and help more than 30 B.C. startups a year commercialize their ideas.

Plug and Play Tech Center signed a memorandum of understanding last week with the city and the Vancouver Economic Development Commission to establish an incubator that provides technology startups with office space, IT support, mentoring and access to other entrepreneurs and potential investors.

No location has been selected for the incubation centre, but the partners said it will likely be in or near downtown and near transit services.

Mayor Gregor Robertson said a pilot project could potentially be housed in Discovery Parks’ facility on Great Northern Way, where the city owns 5,000 square feet.

He added that the city doesn’t have direct capital to support the centre but would use tax incentives and potentially relax land-use permits to help establish it.

Saeed Amidi, Plug and Play’s CEO, said the company’s facilities in the U.S. are funded internally and that the firm will provide most of the capital for the new centre’s construction and operations.

“But we’re also looking for opportunities from the city as well as the federal government to jump-start the project.”

The Vancouver and Plug and Play partnership has its roots in the city’s Metro Vancouver Commerce Program. Under that initiative, the city brought out-of-town executives to Vancouver during the Olympic Games in hopes that they would either establish a presence here or partner with local firms to do business.

The federal government provided more than half of the Metro Vancouver Commerce Program’s $1.5 million budget; Metro Vancouver municipalities provided the rest.

Robertson said the program has delivered $70 million in new investment throughout the Lower Mainland.

The program takes credit for, among other projects, the construction of a $15 million plant in North Vancouver that will supply hydrogen fuel for TransLink’s hydrogen-powered buses.

A key aspect of incubators is the culture of innovation they cultivate by having entrepreneurs working side-by-side on different projects.

Amidi said the incubator will host expos in which startups can present their ideas to venture capitalists and other potential investors. He added that the centre would help Vancouver forge stronger ties with Silicon Valley through Plug and Play’s “mother ship” in Sunnyvale, California.

Amidi said its tenants will have access to more than 50 venture capitalists who manage more than $50 billion in Silicon Valley.

“There are some great ideas and great entrepreneurs [who] have built great products [in B.C.]” said Amidi.

“All we’re going to do is have them think a little more global. This is not a lifestyle type of business. We want them to build global companies.”

A cost structure for incubator tenants was not disclosed, but in the U.S., startups can rent a cubicle at Plug and Play’s facilities for roughly US$500 a month with no yearly lease and can add space as needed.

Amidi said 30 Canadian companies recently toured Plug and Play’s Sunnyvale facility, including 10 from B.C.

A number of those companies would likely be included in a pilot project in 2010 that would help establish a larger centre.

Amidi said it was likely that the larger centre could house between 20 and 30 startups within its first year.

Plug and Play opened its first facility in 2006 in a 150,000-square-foot building in Sunnyvale.

The company now has three locations in the Silicon Valley and three in Los Angeles that collectively house more than 300 tenants.

A number of its 500 tenants during the last four years have developed into major technology success stories, including PayPal, Danger and Sendori.